Local Social Media Ad Spending To Hit 2.3 Billion In 2015

Locally focused advertising in social media is expected to grow at annual rate of 33% from $400 million in 2010 to $2.3 billion by 2015, according to a new forecast from BIA/Kelsey. That would make local advertising roughly a third of the total of $8.1 billion in U.S. social media ad revenue that the research firm projects in four years.

Social media ad sales this year will reach $3.7 billion, of which $700 million will be local ad dollars.

BIA/Kelsey released the local social advertising forecast as part of the fall update to its U.S. local media forecast released in April. The firm defines local advertising broadly as spending by national, regional and small and medium-sized businesses on any form of targeted messaging specific to a geographic market.

Within social media, it defines local advertising as money spent on geotargeted ad formats across social networks, but excluding virtual goods and rewards, social gaming, social commerce or social marketing. Think paid media, not earned or owned media.

Display continues to be the predominant social ad format, with total spending projected to increase 24% annually from $2.1 billion in 2010 to $7.7 billion in 2015. The non-display segment, including formats such as promoted tweets on Twitter, is expected to grow from $50 million to $610 million, representing a 51% annual growth rate.

“To date, local targeting has not been widely adopted by SMBs or national brands,” said Jed Williams, analyst and program director of BIA/Kelsey’s Social Local Media practice. “However, the paradigm is moving to performance, with Facebook and other networks focused on improving format, creative and targeting to boost rates and drive deeper ad engagement.”

The firm expects local ad spending in social media to grow steadily, especially as smaller businesses learn how to leverage targeting features to optimize results. eMarketer has separately projected U.S. ad revenue for Facebook alone will nearly double to $2 billion as it grabs an ever-larger share of the display market.

In its updated report, BIA/Kelsey forecasts local media spending overall will increase from almost $137.2 billion in 2010 to $149.4 billion in 2015. The digital portion of that spending will nearly double from $20 billion to $37.9 billion, making up a quarter of all local media dollars by 2015.